Ujjivan Small Finance Bank is all set to launch its initial public offering (IPO). Ahead of the public offer, Samit Ghosh, founder of the company shared his views and outlook.
“The valuation is market-determined. It is the price which the bankers and we have arrived at based on whatever the market can support,” he said.
“The shareholders of the holding company will be impacted or have been impacted by this IPO. So we need to support them at different levels. So at the retail level, we have made a 10 percent reservation. For high networth customers, they were able to come in at pre-IPO level and we have also encouraged those who were part of our holding company to come in at the anchor level. So it is to support them,” Ghosh pointed out.
Commenting on the ability of borrowers to pay back, he said microfinance customers are sort of immune to business cycles. "We have not seen any impact of that. We deal with other sectors like micro, small and medium enterprises (MSME) and housing. On the MSME side, there is some slowdown and consequently, we have decided to completely move out of the unsecured MSME loans. We only do secured loans,” he stated.
The larger portion of the firm's asset book is the microfinance business, though it has come down from 98 percent to 79 percent of its total asset portfolio. "We always had a strategy to grow it at a reasonable pace. From a credit perspective, we are pretty conservative,” Ghosh noted.
“Our credit portfolio continues to be excellent. This year we had a lot of floods and consequently, various measures were announced to support the flood-affected people. To a certain extent, our provision has increased because of that and as we closed down our unsecured lending to MSME, there is a certain amount of increase there. Still, we continue to have the best portfolio quality. Net interest margins have remained the way it has been in the past, there is no problem with the NIMs,” he added.